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Critically comment on the following statements as they refer to middle-income developing countries (1 page )...

Critically comment on the following statements as they refer to middle-income developing countries (1 page )

"For developmental macroeconomics, increase in consumption, investment, govt spending and exports all cause the economy to expand in the short run. In the long run however, only increases in exports cause the economy to grow"

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Answer #1

The economy is uplifted from the deflationary situation through Fiscal and Monetary policy. Under Fiscal policy increasing the consumption, investment, government spending will improve the effective demand in the economy.

In long run export also contribute to the countries economic growth, howerever in long run, all the components of the aggregate demand consumption, investment, government spending cause the improves the effective demand in the middle-income group's countries.

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